Yams are a crucial part of the palate in the world, with west Africa alone producing about 90% of the global supply.
Found in Africa, Asia, and parts of the Americas, this staple food has a wide range of food varieties created from it, ranging from fried yam chips to yam flour, and holds a competitive position with rice in the food consumption chart of Nigeria.
According to the Federal Ministry of Agriculture in 2021, Nigeria produces 45million metric tonnes of globally distributed yam annually.
There are various types of yam (white yam, water yam, cocoa yam, etc), but the most popular of them is the white yam, which is especially popular from around august to February.
In this article, I will be showing you particular steps to take to successfully start a yam business in Nigeria, some of which include:
- Setting up your yam business
- Transportation and storage
- How to get produce for sale
- Calculating and managing expenses
- How to make profit properly from yam business
How To Start A Yam Business
Seeing as yams are such important foods, with the agricultural industry booming every day, starting and running a yam business is very lucrative, what with the long shelf-life of the produce and the ability to start up with any amount of capital available.
Understanding that choosing a strategic location, knowing the right time to make sales or purchase new stock and proper distribution methods is key to the success of your Nigerian-owned yam business.
There’s not too much involved in the successful execution of a yam business in Nigeria, but what is involved should be adhered to before your business can kick off.
Creating A Business Plan
Before jumping into making orders and selling yams to just anyone, you have to first draw up a business plan, noting the location of your business and the amount of capital you need to start/ you’re starting with.
Disregarding this would make hitches come up from the beginning of your setup and would discourage you from continuing, causing a huge loss for you, and you do not want that.
Conduct A Market Survey
A market survey involves gathering statistical information about the yam market before starting business operations.
You should find out the particular type of yam that is popular in demand, and where to get cheap rates for that specie/type.
Doing this would help subsequently in managing your costs, and help you pinpoint what locations have more expensive prices, which you should avoid if you want to buy, and frequent if you want to sell.
This would also help you to note what farms are better to patronize, based on their proximity and popularity with whatever market you decide to enter into.
Capital Needed To Start Yam Business in Nigeria
The amount of money needed as capital to start a yam business in Nigeria can range from N100,000 to N1,000,000. It totally depends on your supplier, the location, and market analysis.
If you have farmlands and plan to produce your own stock, then the capital needed becomes considerably lower with a bigger profit margin.
If you do not have farmland and plan to source from an existing supplier, the cost of starting increases considerably.
The location also plays a vital role in the capital needed to start a yam business in Nigeria, this is because certain locations do not have farmers/suppliers which might force you into transporting yam from far away (additional cost).
At the end of the day, it all depends on the scale you want to start the business at, there are always more ways to improve or grow the process but it’s best to start small.
Find A Strategic Location For Sales
As part of your market survey has shown, setting up your yam business in a strategic location helps in boosting the success of your sales.
It is best to set up shop in a busy area that isn’t the actual market ground; a location that sees a large number of people go through at major times of the day, e.g a park, or a busy intersection/junction, where you can display your products to the public eye.
That way, you’re not only passively advertising your business, but also eliminating the majority of the competition you would find in a marketplace.
Consider the price range of rent, lease, or actual purchase of said shop; you don’t want to spend a large sum of money just on space, but whatever space you’re getting should be reasonable enough, not just cheap.
Getting Yam Produce
Now you’ve set up your location, and have figured out what you need to know about the market, the next thing to do is to get the yams.
This is done in any of two ways; you could either grow your produce yourself (become the manufacturer and distributor), or you get a supplier.
In deciding what method to get your yams, your capital and available resources play a big role.
Growing Your Own Produce
Creating a farm yourself involves a couple of processes; getting and preparing your land, getting your yam setts ready for planting, the actual planting and care, and finally the harvesting.
The type of land you choose to farm on is important, as yam cannot thrive on just about any type of land.
It should be well-drained and not waterlogged, or your yam setts would get drowned and wouldn’t germinate, which would be a huge loss.
Personally (and probably because I do not have the time on my hands to handle that), I’d advise that to generally save costs and focus your time and energy proper on your sales and the business itself, it would be better to purchase yam tubers to sell, instead of cultivating and growing yours.
However, whatever works for you is just fine, because either way, you’d be making lots of money, gaining tons of experience, and networking while feeding a nation.
Your land should also be bereft of cattle rearers and herders; the presence of cattle on your farm would mean trampling and destruction of your plants and ridges.
Look for land that you could lease or buy, which is more long-term and long-lasting than renting, instead of renting, as a farmer.
Your chosen plot of land should be spacious enough to plant your setts evenly spaced, to avoid crowding out.
Preparing Yam Seeds
Yam seeds are also known as yam setts and can be kept in storage from a previous harvest to be used again, hence, they have to be stored properly.
Despite this, lots of yarm farmers have mourned the loss of their yam setts and seed tubers, as a result of poor storage and inadequate treatment.
Before planting the yam setts, they have to be treated with ash/potash, fungicide, and insecticide, to prevent rot, insect infestation, and disease.
This way also guarantees that they are kept in storage for longer before planting season arrives.
Planting And Harvesting Seasons
Yam planting season starts typically early from October to November, with late planting beginning from March into April.
The first harvest comes within 6-12 months of planting, and the plants are harvested when the leaves begin to yellow and the stalks start drying up.
Sourcing For Yam Suppliers
So you don’t think you have the patience or the time to handle farming and cultivating while juggling the sales business?
The next line of action after setting up your strategically located shop would be to find a trusted supplier.
You could either decide to directly represent a farm/farms by buying their produce to resell, or by becoming a distributor.
If not, there are several Nigerian markets dedicated to such staples as yam, examples being the Bwari market in Abuja, and the mile 2 market in Lagos, Nigeria, where you could find wholesalers who you can buy from, and sell as you deem fit.
Taraba state is another state in the country where yam is easy to get, you’d however have to most times order in bulk because of transportation costs and ease.
Transportation And Storage
An important factor in not losing money in your yam business is knowing the proper ways to store and transport your yams.
As stated earlier, yams have a pretty long shelf-life and are known to be one of the best storage foods.
The reduction of yam stock shelf-life however is caused by exposure of the tubers or setts to salt or leaving them on ground surfaces.
Get a good warehouse that is relatively safe from earthen exposure, moisture, and salts, and that is spacious enough so that your stock is not congested and prone to disease.
Buying And Moving Yams to Your Location
It is normally safer and better to get suppliers that are closer to you and your target market, to reduce the cost of transportation, and mishaps and to track your products more efficiently.
With a farm as your supplier, transportation costs don’t have to be borne by you; the farm pays for the movement of the produce, with you just standing in as distributor.
Most markets have standby trucks for transporting the yams, which is done in bulk, so familiarizing yourself with the transport system of the market is a recommendation.
That way, you’d get used to and understand better the rates and prices of each truckload of yams, to whatever destination, near or far.
Before your yam produce gets to your location, you would need to make sure you have the space to store them.
Get a warehouse or store that is spacious enough to carry the number of yams you are having delivered to you, and you can expand storage space subsequently as you grow.
The proximity of your store to the market is another given factor; the closer it is, the less cost of extra transportation back and forth, and business would go smoother.
Nigerian marketplaces have hands, people known as ‘loaders’, whose job is to offload the produce brought to the market for sales and distribution.
You would have to pay particular stipulated amounts as the wages of said hands, including workmanship of the men that unload the trucks, and the wheelbarrow ‘pushers’ that transport the produce from the load point to the shops.
If you decide to locate your shop outside of the market, you would need to personally higher hands for this purpose, as there wouldn’t be any people on standby for that purpose.
OThegrand aim and objective for starting your yam business are to make a profit, and fully utilize the lucrative nature of the business.
Understand that you don’t just start making a profit from sales just by buying yams and reselling.
Some factors to consider include choosing the right customers, knowing the right time to sell and buy produce, managing your expenses correctly, selling online, and exporting yams internationally.
Choose The Right Customers
The bulk of customers in the foodstuff market include chefs, industrial cooks, and caterers; these are the best people to sell to.
This is because they produce food in bulk on a daily, and so are more likely to purchase food produce (in this case, yams) in bulk.
The Right Time To Buy And Sell Yams
The best time to buy yams is when they can be found everywhere in markets when it is in season; this is the period it is very cheap and affordable.
By the time yams go out of season (around planting season; march to June), it would be an expensive commodity to hold, and demand would be much higher than supply.
This is the best time to sell off your yams; during this time, more profit will be made because prices would be increased in the market generally.
Avoiding lots of spending goes a long way in cutting down and managing your costs; this way you don’t lose more than you gain, and your profit is considerably higher.
We stated earlier that the proximity of your warehouse to your sales point helps in reducing costs; it reduces the cost of transportation to and from the market.
Wholesale Or Retail
Deciding whether you want to be a wholesaler or a retailer decides how you want your profit to be raked in.
Wholesalers buy in bulk from farms and main distributing agents, then sell off at discounted prices in the market; profit is made by selling off the bulk in smaller amounts than was purchased but at the same or a slightly higher price than was gotten.
For example, if you buy 50 bundles of yams from a farm for N30,000, you could decide to sell 10 bundles each at N9000, making a profit of N3000 for each bundle you sell.
Retailers buy in smaller amounts from wholesalers and other market vendors and make their profit majorly from storing.
When yams go out of season, these retailers sell off their stored bundles for increased prices.
Retailing is considerably easier to handle than wholesaling because there is less to handle, meaning fewer expenses, and fewer processes to go through.
A hundred pieces of yams sold in bundles are called Kwarai.
To make more profit, it is recommended to buy yams in Kwarai, and sell them in smaller amounts, with an added tariff to each bundle price.
That being said, wholesaling is a better recommendation for more profit.
There are several Nigerian online marketplaces where your yam produce can be put up for sales, like Jiji, Konga, Jumia, OLX, etc.
Create accounts on any of these marketplaces, and with just clear pictures and descriptions of your products, your business can move to rake in profit from your online presence.
Nigeria is the top producer of yam, so it is a wonder the rate of yam exportation in the country is considerably lower than that of her neighbor, Ghana, recorded as the top exporter of yam in the world, according to Wikipedia.
Exportation of yams needs a considerably larger amount of capital than just local sales; costs range from N300-500,000 above.
Why is this the case?
Exporting yams involves proper certification, and your yam produce needs to meet international standards before it would be allowed into other countries from Nigeria.
Yams are packaged in 20kg cartons and are shipped off to other countries after these requirements are met.
Ensure that you check through every security measure and be certain of the safety of your product before you decide to go into the exportation business.
On That Note
Now you know what it takes to start and successfully run a yam business in Nigeria, one last thing you should remember and hold on to is that as long as you’re not venturing into exportation (at least not yet), you DO NOT need to borrow or take loans for capital.
It’s not a complete no-no, but I’d advise that for a startup, you should rather source for investors and investment funds as an entrepreneur, instead of taking loans.
That being said, you’re now ready to start your own business, so go for it.
If this article has been helpful to you, do well to share it with anyone who needs it too.